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China-EU relations: strategic partnership at a crossroads.

China-EU relations have been stable and steadily growing since the mid-1990s, prompting significant optimism in both China and Europe until a few years ago. The momentum of the China-EU comprehensive engagement was so impressive post 9/11, particularly in the wake of the Iraqi war, that the United States began to worry that the China-EU partnership would weaken the transatlantic alliance. (1) In 2004, David Shambaugh, a seasoned China watcher, even mooted that China and Europe might forge an axis in global politics. (2) Others speculated whether China and the EU would attempt to develop an "exclusive partnership". (3) Recently, however, bilateral ties have been challenged by a number of problems. Sino-European relations are becoming increasingly more fluid and unpredictable. Observers who had been optimistic now start to warn of a downward spiral in Sino-European ties. (4) Other scholars are questioning whether China and the EU can really join hands to shape a new world order. (5) Indeed, nowadays, negative reports and not-so-sanguine views frequently appear in news reports, various forums and the remarks of political leaders. The fallout from the Olympics torch relay in several European cities and the acrimonious rhetorical exchanges between China and many European countries on Tibet in 2008 were perhaps the best indicator of the changing dynamics in China-Europe relations.

How do we understand the emerging dynamics in Sino-European relations? Is the Sino-European relationship inevitably moving towards an era of friction and contention, or will it be able to overcome the current challenges to get back to a new round of positive interactions? This article attempts to address these issues by thoroughly examining the major issues that are likely to continue to shape Sino-European ties in the years to come. The key factors that have shaped and are likely to continue to play a significant role in China-EU ties, notably common economic and strategic interests are discussed, as well as some of the negative trends that have emerged in bilateral relations in recent years. These issues include differences in values, frictions in economic relations and the weakening convergence of strategic interests, which are best epitomised in the EU's 2006 policy paper toward China. (6) Attempts to reconcile all these divergent interests are complicated by the inherent institutional weaknesses of the EU, the disunity among EU member states and the fact that the EU does not have sufficient hard power leverages in dealing with a rising China.

More profoundly, perhaps, the EU-China relationship is not guided by any clear direction because the previous modus operandi has run out of steam and needs to be re-examined. And this re-examination process gets entangled with the changed circumstances, such as the growing Chinese power and influence in Europe and other parts of the world, especially in the context of the current financial/economic crisis. (7) It is argued here that a sense of cautious optimism perhaps best reflects the reality in China-EU relations. China-Europe ties are entering a new period in which both sides will be more willing to raise issues of different concerns and interests, but at the same time will attempt to maintain a normal partnership. Cooperative relations fraught with friction and contention are likely to be the reality in Sino-European relations in the near future.

China-EU Relations: Economic and Strategic Underpinnings

Overview of Relations since the Mid-1990s

Between 1949 when the PRC was founded and the late 1980s, the relations between China and Western Europe (and Eastern Europe to a lesser extent) were largely shaped by Cold War international dynamics, particularly by China's changing ties with the two superpowers. China and the EU set up official ties in 1975. Over the following decade or so, dealing with the Russian bear was the common strategic goal for China and Western Europe as China's late leader Deng Xiaoping told the visiting European Commission President Roy Jenkins in February 1979, "You hold the bear by its forepaws where he bites, and we hold him by the hind paws where he kicks ..." (8)

Since then, the two sides have enjoyed quite stable relations with the exception of a few years after the Tiananmen Incident in 1989. In the wake of Tiananmen, the European Community and individual members imposed various sanctions against China, including the arms embargo that is still effective today. The strained relationship gradually loosened up in the following years. The EU publicised its first policy paper on China in 1995, vowing to seek a long-term engagement with China in order to achieve common interests. (9) In 1996, the EU put forward "a New Strategy of the EU on China", which further detailed cooperation and exchanges in economics, trade, science and technology and developmental aid. Beijing was happy to see the EU's commitment to engagement at a time when China was still facing a lot of diplomatic difficulties as a result of the Tiananmen Incident, particularly in light of the heavy-handed approach by the US during Clinton's first term. Exchanges in all fields, economics, politics and culture started to take off between China and the EU. In 1998, the EU proposed establishing a comprehensive partnership with China in a new policy paper. (10) Expressing support for China's WTO membership, this policy paper proclaimed that the EU intends to upgrade its relations with China to match those of EU-US and EU-Japan relations.

EU-China relations entered a fast track as the two sides started to implement the 1998 policy paper and began to hold summit meetings. In the EU 2001 official document, the EU stipulated concrete short- and medium-term goals in its relations with China. (11) In this document, the EU explicitly emphasised the necessity and importance of engaging China in strengthening global governance. It also pledged to support China in becoming a more open society and to facilitate further integration of the Chinese economy in the world economic system. In the 2002 country strategy paper on China, the EU singled out three areas for further engagement with China. (12) First, it stressed the EU's willingness to help China strengthen its commercial legislation, capacity building, human resources and technology transfer to sustain China's economic and social reforms. Second, the EU agreed to assist China in environmental protection for sustainable development. Lastly, the report encouraged China to further push for the rule of law, respect for human rights and political freedom. The EU 2003 policy paper made further breakthrough in that it recognised China as one of the EU's strategic partners. (13) The paper noted that the two sides needed to forge a strategic partnership against terrorism, weapons proliferation, the threat of SARS, the sluggish world economy and trends in protectionism and regionalism. In its first policy paper on the EU published in the same year, China proclaimed that Sino-European relations were at their best in history, vowing to further strengthen cooperation and engagement with European countries. (14)

Within 10 years, the two sides had set up more than 40 dialogue mechanisms. The EU has also engaged China on law and human rights, for instance, setting up the European House of Law in 2007 and running various human rights training programmes in China. In the words of Chinese Premier Wen Jiabao, the fact that the bilateral relations leapfrogged from a constructive partnership, to a comprehensive partnership, to a comprehensive strategic partnership within a decade showed "a pace of unprecedented growth". (15) The relationship between China and the EU is now indeed comprehensive. The 2007 Joint Statement of the 10th China-EU Summit is a testament to the breadth of such cooperation and engagement. (16) The 47-item document outlines major issues and programmes that the two sides have addressed and continue to address. These issues and programmes range from bilateral political dialogue, multilateralism and the role of the United Nations, counterterrorism and economics and trade to regional issues such as those involving Iran, North Korea, Darfur and Burma, as well as educational and cultural exchanges.

These are not foreseeable areas of cooperation but are actual issues in which the two sides are already actively engaging. For instance, on the cultural front, there have been frequent cultural exchange programmes between China and some European countries in recent years. China staged a "year of China" in France in 2004, putting up more than 378 exhibitions and events throughout the country. At the social level, since 2003, tens of thousands of Chinese tourists have visited European countries every year. Since 2004, the People's Liberation Army (PLA) navy has held a number of search-and-rescue exercises with the British and French militaries. Chinese military officers are trained in German, French and British military institutes. The EU is engaged in China in many capacity-building programmes in the areas of human resources, international financial management and environmental protection. The two sides have also initiated many cooperation projects in science and technology, with China's participation in the Galileo satellite navigation programme being a notable example.

Economic Interests: The Key to Stable China-EU Relations

Trade and other economic interests have been a strong pillar in China-Europe relations ever since the ancient Silk Road era. In modern times, trade and economic relations have particularly been instrumental in shaping China-EU relations. In fact, all EU official policy documents concerning China have one theme in common, that is, to gain economically from China's rapid growth. The economic relations between the two sides have made much headway since the 1990s. Now, the EU is China's largest trading partner, while China is the EU's second largest. According to Chinese statistics, in 2008, Sino-European trade volume reached $425.58 billion. (17) China's exports to the EU account for nearly one fifth of China's total exports. The EU's exports to China increased six times from 1990 to 2005, far surpassing the increase of the EU's trade with other countries. (18)

The EU-China relationship is also closely linked through investment. Up to 2006, the EU had invested in over 24,000 firms in China, with an accumulated total investment of $60 billion. The EU has been the fourth largest source of foreign direct investment in China. (19) European companies are now major players in a few key industries in China, for example, the automotive, chemical, petrochemical and electronics industries. Over 80 per cent of EU companies that have investments in China have reported increasing profits. (20) Due to various reasons, however, Chinese investment in Europe has been minimal, but many people believe there is great potential in this area in the future.

Economic interests also underpin China's relations with individual EU members, particularly the stronger economies. China is well aware of the importance of the Chinese market for European countries and usually plays this card when European leaders visit China. French President Sarkozy was able to get contracts worth $30 billion for Airbus, Areva and other French companies during his visit to China in November 2007. (21) When British Prime Minister Gordon Brown visited China in January 2008, he signed contracts worth $800 million. Brown and Chinese Premier Wen Jiabao vowed to increase Sino-British trade volume to $60 billion by 2010 from $40 billion in 2007. Brown also enthusiastically welcomed more Chinese investments to Britain. (22)

Another area that has contributed to the growing China-EU relationship is cooperation on scientific projects. Over the past 20 years, China has participated in more than 100 research projects with the EU. The EU is China's largest source of technology imports, accounting for nearly half of China's technological imports. Up to 2006, China had imported as many as 24,108 technologies from the EU, involving $98.66 billion worth of transactions. From the Chinese perspective, the EU has been more willing than either the US or Japan to transfer high-technology to China. In 2006 alone, technological transfer from the EU almost equalled the combined transfers from the US and Japan. (23)

Strategic Underpinning of China-EU Relations

Another important pillar that has supported the China-EU partnership is strategic considerations from both sides. These prudent calculations originate from their similar preference for a global order, approaches to major international issues and their own roles in international politics.

First of all, on the global and regional levels, the two sides have no conflicts of fundamental security interests. China and the EU are geographically located far away from each other. The EU has neither security alliance nor concrete security concerns in East Asia other than stability in the region. The Taiwan issue, although not totally out of the picture, is not a very significant factor in China-EU relations. All EU governments strictly adhere to the "one China" position. In the words of Chinese analysts, there is no reason for the two sides to perceive the other as an adversary or a strategic competitor. (24) This absence of conflicting security interests in China-Europe relations is in sharp contrast to China's relations with the US, Japan, India and to a lesser extent, Russia.

China and the EU share the same or similar views on many international issues, in particular, since 9/11. Both sides envision a diversification of power in the international system instead of a unipolar structure, advocate multilateralism as an approach to solve various international problems instead of unilateralism, attempt to uphold the authority of the United Nations and favour diplomatic and peaceful means to deal with potential international conflicts instead of the pre-emptive use of force. Both parties want to play a more important role in international affairs. Both feel that their diplomatic weight would be significantly weakened without the partnership of the other. "If China and the EU manage to build a friendly and fruitful strategic partnership, they can do a lot to bring about a multilateral world". (25)

China values its relationship with European countries and regards the relationship as an important hedging strategy against the always fluctuating S ino-Japanese and China-US relations. China understands that few Europeans subscribe to either the "China threat" theory or the "China collapse" prediction. The political apprehension towards the rise of China in Europe is much less conspicuous than in the US, Japan and other parts of Asia. "Europeans tend to see issues in shades of gray, rather than in black and white. Being less religious than Americans, they are also less inclined to judge in terms of rights and wrongs". (26) Overall, the EU regards the rise of China as a positive development in international relations, while China perceives its relations with the EU as the most problem-free bilateral relationship among China's relations with all major powers. (27) Both China and the EU have realised that they can cooperate with each other, and that this cooperation will contribute to the elevation of their international status and influence. (28)

The strategic dimension in China-EU relations has been consistently demonstrated in a series of EU policy papers on China. The EU's 1995 China policy paper stated that it seeks to "chart a long run course" for EU-China relations in the 21st century because "the rise of China is unmatched amongst national experiences since the Second World War", and China enjoys worldwide as well as regional, economic and political influence. (29)

This strategic importance is also manifested in China's relations with some individual EU member states such as France, Germany, Britain and Italy, as Beijing's relations with these countries are also characterised as having a comprehensive strategic dimension. This is all the more evident in Sino-French relations during Chirac's term. France was the second major power after Russia and the first Western nation to pronounce a "comprehensive partnership" with China in 1997, which was later elevated to a "comprehensive strategic partnership" in 2004. On the highly sensitive Taiwan issue, France even announced that China's Anti-Secession Law was compatible with France's "one China" policy, and France would agree to China's "one country, two systems" proposal to solve the Taiwan issue. In the past years, Beijing and Paris shared identical or similar views on many international issues such as those on Iraq, non-proliferation, North Korea and multilateralism. Close cooperation between France and China was based on the common desire to "make the world more multi-polar and plural than it is today because they think that balancing the US' overall domination will contribute to alleviating international tensions and solving pending problems". (30)

New Negative Trends in Bilateral Relations

Despite the importance of China-EU relations and the political will from both sides to further strengthen these ties, more problems have emerged in recent years. These are rooted in differences in values, economic frictions and other concrete issues such as the EU's arms embargo on China, China's market economy status (MES) and global governance. All these current and emerging disputes and differences prompt scepticism over the feasibility of a strategic realignment between China and the EU.

Frictions over Values

Human rights have never been absent in EU policy towards China. In its first official policy paper in 1995, the EU stated it would continue to be concerned about China's human rights at three levels inside China, bilaterally and multilaterally in various international organisations. However, human rights have not been a prominent issue between the two sides ever since the mid-1990s. Unlike the US, the EU has not adopted a heavy handed approach to China's handling of human rights. Instead, the EU has been willing to engage China on human rights, and in fact, the two sides have regularly held dialogues on this issue. For many years, China has appreciated the EU's attitude towards China's human rights.

However, things have been changing in recent years. European leaders, not only the big three, but also increasingly Eastern European leaders as well, are more willing to openly criticise China on human rights and to apply more pressure. German Chancellor Angela Merkel, for instance, visited China in the summer of 2007 and raised human rights as one of her priorities in dealing with China. She then received the Dalai Lama in the Chancellery. The Chinese government responded with retaliations, cancelling a few high-level meetings and refusing to attend dialogues on environmental issues and human rights. While the Sino-German rift was reportedly healed in January 2008 by the meeting of the foreign ministers of the two countries, (31) the optimism was short lived. The relationship was again severely tested in the March 2008 Tibetan crisis. The European Parliament in October 2008 presented its top human rights award--the Sakharov Prize--to Hu Jia, a social and political activist in China, right before the opening of the Asia-Europe Meeting (ASEM) in Beijing. China responded ferociously to French President Sarkozy's decision to meet the Dalai Lama in December 2008 by cancelling the scheduled China-EU summit, plunging the bilateral relations to a "new low". (32) In the following months, Beijing repeatedly demanded that France "correct" its actions and straightforwardly support China's position on the Tibetan issue. Chinese Premier Wen Jiabao intentionally left France out of a tour of several European capitals and the EU headquarters in late January and early February 2009.

Chinese analysts believe that the EU is more prepared to insist on its own values and institutions in dealing with other actors in international politics largely because in recent years, the EU has been clearly demonstrating an effort to become a "normative power". In this context, the EU is more likely to emphasise human rights, democracy, sustainable development and security in relations with China. The EU is likely to use its normative framework to compel China to further open up its market to European companies, and at the same time put pressure on China to share greater international responsibility in accordance with EU values. They believe that the growth of the EU's normative power and the EU's pressures on China are likely to increase the difficulties in the future development of the China-EU strategic partnership. (33) What has been insufficiently understood in China is the fact that the EU's increasing focus on China's human rights perhaps also reflects the political frustration in many European capitals: decades of the EU's engaging posture has not produced any notable progress in human rights protection in China.

The differences in EU and US approaches to China's human rights are now becoming increasingly blurred. The US-EU joint statement after their summit in June 2008 expressed their concerns over the Tibetan issue and criticised China's human rights situation. Chinese Foreign Ministry spokesman Qin Gang retorted by saying that the Tibetan issue and human rights are purely China's domestic affairs, and China would not allow any outside interference. (34)

In fact, the EU's emphasis on human rights in recent years has led to a change in the Chinese perception of the EU. China now realises that human rights will likely be a persistent issue in its relations with the EU. According to a senior analyst at an international studies institute under the Chinese Foreign Ministry, China regards a few EU policies as efforts to contain or constrain China. For example, some EU states allow the political influence of "Tibetan independence", the EU's opposition to China's passing of the Anti-secession Law in early 2005 and the continuing arms embargo against China. I believe that the EU prefers to see a stronger China but at the same time is unprepared to see China become too strong. (35) Although the EU has never openly proclaimed any support for Tibetan independence, political elites and many ordinary Chinese people regard European leaders' sympathy for the cause of the Tibetan government in exile as an infringement of China's domestic affairs and an unfriendly act toward China. More alarmist Chinese analysts even regard the EU's human rights campaign as a residual Cold War mentality and part of its effort to Westernise China. (36)

The fallout from the Olympics torch relay in several European cities in 2008 demonstrates the vulnerability of EU-China relations. The Chinese public responded with furore to France's apparent failure to protect the torch. Thousands of Chinese joined protests and campaigns to boycott the French supermarket chain Carrefour. French President Sarkozy soon sent high-profile diplomatic envoys to Beijing to mend fences. However, the Paris City Council extended honorary citizenships to the Dalai Lama and Chinese political activist Hu Jia, dashing the positive results of all these efforts. The Chinese Foreign Ministry warned that the Paris City Council's action could only be considered as "another grave provocation of 1.3 billion Chinese people". (37)

The Olympics torch and Tibet issues have inevitably left "deep scars" on both sides. (38) A poll conducted by the Pew Global Attitudes Project in the aftermath of the Tibetan unrest reveals that China's favourable image in many European countries has slipped. In France, for example, only 28 per cent of the respondents expressed a favorable opinion of China as compared to 47 per cent in 2007. In Spain, Germany and Poland, the percentages of the respondents who held favourable opinions of China were 31 per cent, 26 per cent and 33 per cent respectively. All these numbers were lower than the US' 39 per cent. Concerns over China's increasing military might, which had been a less salient issue in Europe, have also become far more notable now, with more than 70 per cent of the respondents expressing apprehension over China's military power. (39) Likewise, in China, ordinary people are quite upset with Europe's political and moral support for the Tibetan government in exile. In the last months of 2008, many people in China have called for a boycott of tourism to France. Young Chinese also oppose and boycott the London Metropolitan University, which extended an honorary degree to the Dalai Lama. (40)

In recent years, China's expanding profile in Africa has also become a contentious issue between China and the EU. Many analysts maintain that China's increasing influence in Africa poses "a threat to Europe and the United States". (41) The West sees China's no-conditions-attached aid policy to Africa, particularly China's military assistance to a number of authoritarian regimes, as sabotaging Western efforts to improve governance in many African nations. (42) Due to China's presence in Africa, many African nations are becoming more resistant to Western policy proposals. For example, a majority of African nations rebuffed the Economic Partnership Agreement proposed by the EU at the latest EU-Africa Summit in December 2007. One reason is because they now have the option to turn to China for assistance. China's energy diplomacy in Africa has become a sensitive issue in an "increasingly ambivalent and complex EU-China relationship of regional and global cooperation, competition and diplomatic conflicts". (43)

Arms Embargo: A Continuous Irritant in China-EU Ties

Related to the human rights tensions is the EU's arms embargo that was imposed on China in the wake of the Tiananmen Incident in 1989. A few years ago, some former European leaders, such as Chirac and Schroder, openly supported lifting the embargo, but many other European leaders have argued that China's human rights situation has not improved to the extent that merits the lifting of the sanctions. They specifically point to the fact that China has not ratified the UN Covenant on Civil and Political Rights. Tibet has also been frequently mentioned as a reason that the embargo should be maintained.

Since the 1990s, Beijing has repeatedly urged the EU to lift the arms embargo. In China's 2003 policy paper on the EU, Beijing explicitly called for the EU to lift its arms embargo. Sensing the complications of the EU's expansion in 2005, China intensified its efforts to have the embargo lifted. Despite French and German inclination to repeal the arms embargo, the EU was not able to reach a consensus before May 2005. Chinese analysts have long argued that it is unfair for the EU to maintain the arms embargo. They argue that even North Korea is not included in the EU arms embargo. It is merely inappropriate to parallel China with Zimbabwe and Myanmar. They also contend that lifting the arms embargo should be perceived as the last step in normalising China-EU relations instead of a reward to China. It is simply a symbolic action because lifting the embargo does not mean any increase of arms sales to China. This is so since the export regulations of individual EU members and the EU code of conduct on arms exports would still be in effect towards China. Former Chinese Foreign Minister Li Zhaoxing stated that the arms embargo is simply a political discrimination against China. (44)

Chinese analysts believe that the US played a decisive role in the arms embargo issue. From 2004 to 2005, US leaders such as former Secretary of State Collin Powell put strong pressure on the EU not to lift the arms embargo. Critics in the US Congress accused Europe of selling out the Atlantic alliance in order to ingratiate Beijing. (45) A few EU members such as Britain, Poland, the Czech Republic and Latvia served as a US "Trojan horse" in the EU. US President Bush stated that the US would retaliate if the EU lifted its arms embargo against China. As a result, the debate on China's arms embargo could not reach a consensus. (46) The US justified its opposition on the basis of China's own military build-up and the threatening posture on Taiwan: "Americans see the lifting of the embargo not as an enlightened gesture of engagement, but, at best, as the irresponsible pursuit of commercial advantage in the growing Chinese market. At worst, it is a direct threat to the security of the United States and key partners in Asia". (47) Some new members of the EU that have a more or less pro-US foreign policy sympathised with US concerns that lifting the arms embargo would further challenge the military balance between Mainland China and Taiwan, and entail the possibility of China using the weapons against American interests. (48)

Growing Economic Disputes

Sino-European relations are increasingly strained by economic and trade disputes. (49) These disputes include trade imbalances, appreciation of the Chinese yuan, product safety, intellectual property rights and most importantly, China's market economy status.

The EU is increasingly concerned about the flood of Chinese imports. In 2005, for instance, the surge of textile imports almost created a crisis situation in many European countries, with prices falling by as much as 75 per cent. China and the EU eventually managed to agree to a pact in which China pledged to restrict the annual increase in exports of 10 types of textiles to Europe to a maximum of 12.5 per cent until the end of 2007. In October 2007, the two sides again agreed to set up a joint surveillance system to monitor Chinese textile exports to Europe with the possibility of EU adopting safeguard measures against the dramatic increase of textile imports from China. The two sides are still in imbroglio over Chinese shoe and steel exports to Europe.

The most contentious issue is the surging Chinese surplus in its trade with Europe, which is indeed phenomenal. Among the top 10 countries with which China has a trade surplus, four are from the EU. Collectively, the EU is the third largest source of trade surplus for China, next to Hong Kong and the US. Meanwhile, China claims that part of the trade imbalance is due to the different methods of statistical data analysis. For instance, in 2005, Chinese statistics show a trade surplus of $70.1 billion, whereas EU data show a deficit of $132.2 billion in bilateral trade. Chinese analysts claim that the growing trade imbalance is caused by several factors. First, it has to do with the fact that European countries are relatively wealthier and have a strong demand for Chinese products, whereas China is still a developing country and so its consumption is limited. Second, the disparity is also largely a result of economic globalisation and the relocation of various industries. A large number of foreign investments in the labour-intensive and electronics industries swarmed to China, making the Chinese export sector largely a processing and assembly line. Third, the technological innovation of indigenous Chinese firms contributed to their competitiveness in international trade. Fourth, China's WTO membership also contributed to the country's growing trade surplus. China thus concludes that its exchange rate is not a significant factor in causing the trade imbalance between China and the EU. (50)

However, the EU's explanation is vastly different. At the core of the EU complaint is the contention that China has not opened up its market for foreign businesses. For example, the EU complains that its exports to Switzerland are even larger than those to the whole of China. The EU is upset that the Chinese government plays an overly interventionist role in restricting foreign businesses in China. For instance, both the US and the EU complain about China's prohibition of foreign companies providing financial information to Chinese users directly.

The issue of the exchange rate used to be a major US concern. However, more recently, the EU also began to strongly urge China to increase the value of the yuan against the euro. China and the EU have been trying to address this issue, but so far have not made much progress. The 2007 annual EU-China Summit did not make any breakthrough, merely noting that China should have a more flexible exchange rate, a position that the Chinese government had openly proclaimed. The EU asserts that China, as the world's fourth largest

(1) Christopher Griffin and Raffaello Pantucci, "A Treacherous Triangle?: China and the Transatlantic Alliance", SAIS Review XXVII, no. 1 (Winter-Spring 2007).

(2) David Shambaugh, "China and Europe: The Emerging Axis", Current History, Sept. 2004.

(3) Wolfgang Klenner, "Economic Relations between the EU and China: Evolution of an Exclusive Partnership?", China: an International Journal 3, no. 2 (Sept. 2005): 331-46.

(4) David Shambaugh, "China-Europe Relations Get Complicated", Brookings Northeast Asia Commentary, May 2007; David Shambaugh, "The 'China Honeymoon' is Over", International Herald Tribune, 26 Nov. 2007.

(5) Charles Grant with Katinka Barysch, Can Europe and China Shape a New World Order? London: The Centre for European Reform, May 2008.

(6) Giinter Schucher, "Dashed Hopes: EU-China Relations after the EU's 2006 Communication on China", China aktuell Journal of Current Chinese Affairs) 6 (2007): 83-98.

(7) There are emerging views in the EU that China should no longer be treated as a developing country. See, for example, John Fox and Francois Godement, "Europe Needs to Stop its Pandering to China", Financial Times, 19 May 2009.

(8) Stanley Crossick and Etienne Reuter, eds, China-EU: a Common Future (Singapore: World Scientific, 2007), p. xii.

(9) "A Long Term Policy for China-Europe Relations", Communication from the Commission, Brussels, 5 July 1995.

(10) "Building a Comprehensive Partnership with China", Communication from the Commission, Brussels, 25 Mar. 1998.

(11) "EU Strategy towards China: Implementation of the 1998 Communication and Future Steps for a more Effective EU Policy", Communication from the Commission, Brussels, 15 May 2001.

(12) "Country Strategy Paper 2002-2006", 1 Mar. 2002.

(13) Commission of the European Communities, "A Maturing Partnership--Shared Interests and Challenges in EU-China Relations", Brussels, 10 Sept. 2003.

(14) "China's EU Policy Paper", Oct. 2003; at <http://www.delchn.ec.europa.eu/euan_basi1.htm> [16 June 2008].

(15) Wen Jiabao made the remarks during European Commission President Jose Manuel Barroso's visit to Beijing in April 2008; Ng Tze-wei, "EU-China Talks Focus on Business Relationship", South China Morning Post, 26 Apr. 2008.

(16) The statement is at <http://english.people.com.cn/90001/90776/90883/6314110.html> [20 June 2008].

(17) "Background Information: Sino-EU Relations", Xinhua News Agency, at <http://news.sina.com.cn/c/2009-05-20/093317852952.shtml> [Apr. 2009].

(18) Fan Ying, "Zhongguo yu oumeng de jingmao guanxi: chengjiu tiedian yu wenti" (ChinaEU Trade and Economic Relations: Achievements, Characteristics and Problems), Foreign Affairs Review (China), no. 102 (Apr. 2008).

(19) Ibid.

(20) "A New China-EU Deal", China Daily, 26 Feb. 2008.

(21) Nicola Clark and David Lague, "The French Cash in on Chinese Boom", International Herald Tribune, 27 Nov. 2007.

(22) Sim Chi Yin, "Brown Urges China to Make Britain its Top Investment Destination", Straits Times, 19 Jan. 2008.

(23) Fan Ying "Zhongguo yu oumeng de jingmao guanxi: chengjiu tiedian yu wenti" (China-EU Trade and Economic Relations: Achievements, Characteristics and Problems).

(24) Li Hua, "Zhong ou guanxi pingxi" (An Analysis of China-EU Relations), Guoji wenti yanjiu (International Studies), issue 6, 2005.

(25) Charles Grant with Katinka Barysch, "Can Europe and China Shape a New World Order?".

(26) Stanley Crossick, "The Rise of China and Its Implications for the EU", EAI Working Paper, no. 132, 4 Sept. 2006.

(27) Huo Zhengde, "Lun Zhong ou zhanlue guanxi" (Analyzing Sino-EU Strategic Relations), Guoji wenti yanjiu (International Studies), issue 2, 2005.

(28) Ibid.

(29) The EU Commission, A Long Term Policy for China-Europe Relations, 1995.

(30) Jean-Pierre Cabestan, "Relations between France and China: Towards a Paris-Beijing Axis?", China: an International Journal 4, no. 2 (Sept. 2006): 327-40.

(31) Judy Dempsey, "China and Germany Patch up Differences", International Herald Tribune, 22 Jan. 2008.

(32) Ben Hall and Geoff Dyer, "China-EU Relations Hit New Low", Financial Times, 27 Nov. 2008.

(33) Cui Hongwei, "'Guifan xing qiangquan' oumeng yu zhong ou guanxi de hexie fazhan" (The EU's Normative Power and the Smooth Development of Sino-EU Relations), Shehui kexue (Social Sciences), issue 11, 2007.

(34) Foreign Ministry spokesman Qin Gang press briefing, 11 June 2008.

(35) Li Hua, "Zhong ou guanxi pingxi" (An Analysis of China-EU Relations).

(36) Gao Hua, "Zhong ou guanxi de jinzhan yu tiaozhan" (Progress and Challenges in Sino-EU Relations), Heping yu fazhan (Peace and Development), issue 1, 2006.

(37) Chua Chin Hon, "Beijing Slams Paris Honour for Dalai Lama", Straits Times, 23 Apr. 2008.

(38) Jonathan Eyal, "Bumbling around EU-China ties", Straits Times, 29 Apr. 2008.

(39) The Pew Global Attitudes Project, 12 June 2008 at <http://pewglobal.org/reports/pdf/260.pdf> [25 Apr. 2009].

(40) Global Times (Huanqiu shibao), 13 June 2008.

(41) Leander Schaerlaeckens, "China-Africa Bond Worries US, EU", Washington Times, 14 Feb. 2008.

(42) Jean-Pierre Cabestan, "Relations between France and China".

(43) Frank Umbach, "China's Energy and Raw Material Diplomacy and the Implications for the EU-China Relations", China Actuell (Journal of Current Chinese Affairs), issue 1, 2007.

(44) "China Urges EU to Trash Arms Embargo", China Daily, 4 Nov. 2005.

(45) Christopher Griffin and Raffaello Pantucci, "A Treacherous Triangle? China and the Transatlantic Alliance".

(46) Wu Baiyi, "Hou lengzhan guoji tixi biandong yu zhong ou guanxi" (Changes in Post-Cold War International System and Sino-EU Relations), Ouzhou yanjiu (European Studies), issue 5, 2005.

(47) James B. Steinberg and Philip H. Gordon, "Selling Arms to China: If Europe Has to Do It, Here's How", International Herald Tribune, 18 Mar. 2005.

(48) Chen Zhimin, "Oumeng de youxian zhanlue xingwei zhuti tiexing yu zhong ou zhanlue huoban guanxi" (The Nature of the EU as a Limited Strategic Actor and Sino-EU Strategic Partnership), Guoji guancha (International Observation), issue 5, 2006.

(49) John Thornhill, "Trading Strains", Financial Times, 1 Oct. 2008.

(50) Li Jun, et al., "Zhongguo-oumeng maoyi cha'e xianzhuang ji qi yuanyin de shizheng fenxi" (An Empirical Analysis of the State and Factors of China-EU Trade Imbalance), Guoji maoyi wenti (International Trade Problems), issue 11, 2007.

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economy, has a greater responsibility in the monetary sphere. In addition, it is suggesting that an appreciation of its currency is in China's own interests since this would promote the shift from an export-driven economy to one supported by domestic demand. However, these have fallen on deaf ears. The Europeans are upset that the Chinese government yielded to US pressure and allowed the appreciation of the yuan, but has done little to address the exchange rate of the yuan and the euro. In the near future, the EU and the US are likely to jointly put pressure on China on the yuan issue, which could put China in a difficult situation and further complicate China-Europe relations. (51)

In recent years, there have been louder complaints criticising China's protection of intellectual property rights (IPR). European leaders frequently cite the fact that 80 per cent of the counterfeit goods seized at their ports originate from China. Mandelson, the EU's trade chief, commented that the Chinese government tolerated the "theft" of the technologies and patents from European companies, while the Chinese retorted by saying that the EU had invented "false problems". (52) China contends that it has done its utmost to protect the IPR of foreign companies and that the West simply fails to take note of the progress China has made. Beijing also argues that since it took a long time for the West itself to construct a strong IPR regime, it is simply unrealistic for China to perform perfectly within the short time span of a few decades.

In June 2007, in a private letter of complaint, 10 trade associations in Europe representing various industries that had suffered from Chinese imports, such as the textile, chemical, metal and fertiliser industries accused Mandelson of being soft on China. (53) Product safety, usually a technical issue, flares up sentiment. In late 2007, when EU trade chief Mandelson raised the issue of the safety of China's exported products, Chinese official Wu Yi said that she was "extremely dissatisfied" with Mandelson's comments, alleging the product safety issue had been politicised as a guise for trade protectionism. (54)

From the Chinese perspective, with China's rapid economic growth in recent years, the EU is becoming more reluctant to view the country as a developing nation or a typical developing country. The EU now tends to regard China as a strong industrial power that competes with and even threatens EU economic interests. (55) The EU 2006 policy paper on China sets the tone for a more demanding policy on China, stating that "China should open its own markets and ensure conditions of fair market competition. Adjusting to the competitive challenge and driving a fair bargain with China will be the central challenge of EU trade policy in the decade to come". (56)

It would be very difficult for China to make substantial concessions. According to a senior Chinese trade official, the average profit margin of China's textile exports is only 3-5 per cent. (57) A sudden appreciation of the yuan will not only further squeeze the profit margin of the textile industry but will also make many low-skilled Chinese labourers unemployed. This is the worst possible scenario for the Chinese government given rising unemployment.

In fact, the Chinese believe that their position in trade relations is disadvantaged by the EU's refusal to grant market economy status to China. When China joined the WTO in 2001, it accepted the term "transitional economy" for a maximum duration of 15 years. China believes that the EU can and has abused China's non-market economy status in various anti-dumping charges. If China is recognised as a market economy, Chinese firms are trusted to submit their own cost and price data. However, since China is not granted market economy status, the cost and price of goods from China are compared with similar products from other countries in order to determine whether Chinese firms practise dumping. Chinese companies can easily be accused of dumping since few countries boast of lower costs than China's.

This is why the Chinese government has repeatedly requested and put pressure on the EU to recognise China's market economy status (MES). The EU has categorically refused to do so, but has instead granted market economy status to dozens of individual Chinese companies. The EU claims that the Chinese economy is still too heavily influenced by state interference especially in the financial sector, lacks the rule of law and suffers from poor corporate governance (in particular, weak accounting rules). Beijing believes that this is unfair since the vast majority of economic activities in China are now determined by market forces. According to a European study, "although the picture is mixed, there is much about China's present-day economy--particularly its export sector--that means it deserves market economy status. The competitiveness of its goods is based mainly on low cost, productive labour rather than subsidies, easy finance or controlled prices". (58) But with intensifying competition, it is hard to imagine that the EU will come up with any consensus to grant China a market economy status. Many EU member states, such as Bulgaria, Cyprus, Finland, Greece, Hungary, Italy, Malta, Portugal, Romania, Slovakia, Slovenia and Spain, value their economic ties with China but at the same time regard anti-dumping measures as a useful tool and oppose awarding market economy status to China. (59)

Despite all these problems, however, there is certainly political will on both sides to cope with various economic issues and problems. At the summit meeting in November 2007, for instance, the EU and China decided to set up a vice-premier-level dialogue to address a wide range of issues on trade imbalance, including effective market access, intellectual property rights, environment, high technology, energy and China's market economy status. (60) The two sides again agreed to seek balanced trade and foster cooperation on climate change during the visit of European Commission President Jose Manuel Barroso to Beijing in April 2008.61 In the context of the ongoing financial/economic crisis, both the EU and China expect to cooperate in reining in the economic downturn. Premier Wen's European tour early this year attests to the political will on both sides. (62) The London G20 meeting provided another platform for the political leaders of the two countries to further engage each other to tackle the economic challenges. It appears that China now has a better understanding of the EU's concern over the bilateral trade imbalance and the growing protectionist sentiments in Europe. In February, Beijing sent a purchasing mission to Europe and concluded $15 billion worth of deals. Wen, at the 11th China-EU Summit in May in Prague, announced that China would send another similar delegation to Europe to increase imports from Europe. (63)

At the end of the day, however, China and the EU will have to address the economic and trade disputes that are undermining the strongest pillar in their partnership. This economic pillar could be further weakened by the EU's expansion eastward. Further integration among its members may have a negative impact on EU-China economic cooperation. Some Western European companies, particularly the smaller ones, are likely to seek investment opportunities in Central and Eastern Europe instead of China. (64)

The 1985 EU-China Agreement on Trade and Economic Cooperation has successfully guided bilateral relations in the subsequent two decades. However, this agreement covers only trade in goods. The current economic ties between China and the EU are vastly different from those in the 1980s. Nevertheless, the two sides have expressed willingness to negotiate a new deal to steer their economic cooperation in the future. This could be a formidable task given the current complications in their economic relations.

Strategic Realignment

Coupled with these changes in values and the economic sector, and perhaps also a reflection of these changes, there are some signs that indicate a subtle strategic realignment in Sino-European relations. This realignment has to do with the EU's own reflection on the merits and drawbacks of its previous approach to China and to a lesser extent the role of the US which, on one hand, facilitates the strategic engagement between China and the EU, and on the other, constrains the further development of a China-EU strategic partnership. The latter effect is becoming more and more prominent in recent years.

At the strategic level, there is notable frustration among EU elites that the EU's previous "unconditional engagement" policy towards China has largely failed. In a comprehensive policy report recently released by the European Council on Foreign Relations, the EU's China strategy is described as "anachronistic" in that under the influence of the EU engagement policy China has made little progress in liberalising its economy, improving the rule of law and democratising its politics. (65) The EU's gain from an engagement with China has fallen far below what the major EU states had expected and has been disproportionately asymmetrical compared with the benefits Beijing has gained. The report further argues that China has paid little heed to European values and even today regularly contravenes or even undermines them. Citing China's decision to cancel the China-EU summit scheduled in December 2008 in response to Sarkozy's plan to meet the Dalai Lama, the report notes that China no longer bothers to hide its strength and shows diplomatic contempt towards the EU. On the basis of these assessments, the report calls for a "reciprocal engagement" that would reverse the current trends in EU-China relations. More specifically, China is expected to take actions, mostly further opening up its domestic market, to redress the trade imbalance with the EU, to shoulder more responsibilities in meeting various global challenges and to better coordinate with the EU on policies in Africa. This policy report of course does not represent the views of all EU member states or political elites, but it does capture the growing general sentiment in many EU capitals. Given China's current international priorities and domestic imperatives, it is hard to imagine that Beijing would be willing to make the concessions necessary to meet the EU's expectations.

The development of China-EU strategic ties is unlikely to be free from US interference. The intensifying engagement between the EU and China has raised the ire of the US. According to some analysts, the steadily improving relationship between China and the EU poses important challenges and opportunities for US interests. "These developments may not only challenge the US position vis-a-vis China and Europe; they also could contribute to an increasingly competitive, confrontational and ultimately detrimental deterioration in traditionally strong transatlantic relations, while also further exacerbating persistent mistrust in US-China ties". (66)

The EU, in any case, still needs US involvement in European security. The EU and US are much closer in terms of culture, values and political institutions. The EU-US commonalities in their views of China's position in the international community outweigh their differences. (67) Following the heated situation surrounding the arms embargo in 2005, the EU and US political elites began to reconcile their divergent views on China. (68) This has become all the more evident with the emergence of new leaders in Germany, France and Britain. Merkel, Sarkozy and Brown are far more willing to mend fences with the US and raise values in their foreign policies, as noted earlier. Merkel's frequent criticism of China is in sharp contrast to her predecessor Gerhard Schroder, German chancellor from 1998 to 2005, who "visited China six times and Russia 15 times, [and] never spoke publicly about human rights". (69) Chinese analysts believe that the EU will be behaving more and more like the US in dealing with China. They suspect that the EU tends to lurk behind the US and reap gains after the US succeeds in pressurising China. A good example is the extra concessions the EU was able to get from China after the US concluded the agreement with China regarding China's WTO membership. Now, it seems that the EU is doing the same with regard to China's currency revaluation issue. (70)

With the expansion of the EU, Chinese analysts find that US influence in the Atlantic alliance has increased. Now, the US can exert more influence on the new EU members to make it more difficult to achieve EU consensus on China. According to Ding Yuanhong, former Chinese ambassador to the EU, the US fears that a stronger EU would pose a challenge to its global leadership position and is increasingly trying to constrain and even prevent the further integration of the EU. The US tries to achieve this by adopting a divide-and-rule strategy, playing pro-US members such as Britain and Poland against France and Germany and at the same time trying to divide France and Germany. (71) France and Netherland's veto of the EU constitution and the recent Irish voters' rejection of the Lisbon treaty illustrate the weakening of the internal cohesion of the EU. This weakened cohesion is likely to jeopardise progress towards China's market economy status and the lifting of the arms embargo. (72) One commentator noted, "The principle foundation of the EU is that for major issues there must be unanimous agreement among member states. That, or the measure doesn't get taken. This means that the EU, in some ways, is only as strong as its weakest link. For contentious issues, brokering a compromise either leads to an impasse or a watered down agreement that might be satisfactory to all the parties but carries very little meaningful weight". (73)

The institutional weakness of the EU is also a negative factor that hampers the smooth development of the EU-China strategic partnership. For instance, the EU Commission is responsible for negotiating with China on partnership and cooperation agreements, but the Council of Ministers is in charge of other political issues with China such as arms embargo. The EU headquarters is often at odds with member states when it comes to specific issues related to China, such as human rights in China, Taiwan and Tibet. Member states also have different priorities in dealing with China. Southern and Eastern European countries tend to be sensitive to Chinese imports. Germany is more concerned about China's protection of IPR, and Britain is more interested in opening China's market to financial and service areas. The three big EU members, Britain, France and Germany, also see one another as rivals with respect to commercial interests in China and tend to approach China on the basis of their respective bilateral interests rather than through collective EU interests. According to Fox and Godement, two EU foreign policy analysts, the disunity among EU members in dealing with China has further intensified. In terms of how to manage China's impact on the European economy and how to engage China politically, the EU is split into four groups: assertive industrialists, ideological free-traders, accommodating mercantilists and European followers. (74) Such division in the EU does not bode well for the formation of any well-coordinated strategy towards China in the future. The internal environment of the EU's strategic decision-making with respect to China has become quite different from the previous model of sustained convergence of political interests among Germany, France, the UK and the European Commission as described by Wong. (75)

According to some Chinese analysts, at the global level, the EU is also seeking a hedging policy to avoid the shocking effect of worsening relations with China. For instance, it has been pursuing bilateral free trade agreements with South Korea, India, ASEAN countries and Latin American countries as part of its global trade strategy to cope with the challenge from China. The EU also seeks to further strengthen its "transatlantic economic partnership" with the US as it deals with the growing power of newly emerging states such as China and India. (76)

Recently, on the popular level, there have also been significant changes in attitudes towards China among Europeans. More and more European voters are beginning to regard China's rise as much of a curse as a blessing. Eberhard Sandschneider, director of the German Council on Foreign Relations, observes: "Europe has switched from China hype to China angst". (77) A Financial Times/Harris poll carried out between 27 March and 8 April 2008 in the aftermath of the Tibetan fiasco showed that many Europeans regard China as the biggest threat to global stability. "The poll found that in five European countries--Italy, Germany, Britain, France and Spain--an average of 35 per cent of respondents saw China as a greater threat to world stability than any other state". (78) This is in sharp contrast to the largely favourable image of China in Europe in the past. And sporadic reports of China's involvement in spying activities in the virtual world against the interests of various European countries feeds into an adverse European perception of China. (79)

The 2006 EU policy paper on China started to focus on calls for China to share greater responsibility in the partnership. "The partnership should meet both sides' interests and the EU and China need to work together as they assume more active and responsible international roles, supporting and contributing to a strong and effective multilateral system". In June 2007, while unveiling its own national "Climate Change Action Plan", China openly rejected the EU's goal to keep the increase in global temperatures within two degrees centigrade, saying that the proposal lacked "a scientific basis". (80) A recent EU summit pledged to reduce the 1990 level of carbon emissions by one fifth by 2020. To achieve this goal, European leaders indicated they would put more pressure on China and other large greenhouse gas emitters.

Conclusion

For about a decade since the mid-1990s, China and the EU enjoyed a relationship that has been described as "a honeymoon", a term that may not have represented the mainstream view in the EU regarding its relations with Beijing but nonetheless connotes the positive interactions between the two parties in that period. Propelled by common economic interests and strategic considerations, the two parties extensively engaged each other and cooperated quite closely on a variety of international issues. The success of the decade-long engagement led to their mutual expectation of a comprehensive strategic partnership that the two sides started to contemplate in 2003 and that gained new attention in 2006. It has been almost two years since China and the EU started to negotiate a new Partnership and Cooperation Agreement to steer the future development of their relations. There have been active negotiations on the agreement in recent years, but bilateral differences have obstructed any significant progress. It is still unclear what kind of strategic partnership they can mutually agree upon. China is interested in having a revised version of the 1985 agreement whereas the EU is intent upon reaching a brand new document.

In May 2004, Chinese Premier Wen Jiabao explained (during a lecture in Brussels) what he thought a strategic partnership meant: "strategic" means that the cooperation should be long term and stable, with a vision on the larger picture of China-EU relations. The relationship should be free from constraints caused by differences in ideology and social systems and should be immune to the impact of individual events that occur from time to time. "Partnership" means that the cooperation should be equal, mutually beneficial and win-win, with the relationship based on mutual respect and mutual trust. Both sides should endeavour to expand converging interests and seek common grounds on major issues while shelving differences on minor ones. (81)

Using Wen's criteria as the benchmark for a China-EU strategic partnership, we can be reasonably sceptical that such a partnership could be in shape in the near future. Both China and the EU have the political desire to maintain a long-term cooperative relationship, but ideology and differences in some specific issues are increasingly straining bilateral relations. The confident exuberance and optimism surrounding China-EU relations in 2005, at the time of the 30th anniversary of China-EU relations, are no longer there. Europe has begun to adopt a more heavy-handed approach to China. This approach is partly a reflection of Europe's frustration over a lack of reciprocity from China over many issues, as the EU 2006 China policy paper clearly indicates. It is also a reflection of the changes in European political leadership. (82) The enlargement of the EU, coupled with its consensus-seeking, decision-making procedures, makes some of the thorny problems in the EU-China relations even more difficult to resolve in the short term. How to construct a strategic partnership with China is thus a "serious challenge" for the EU. (83) Likewise, in China, both at the elite and popular levels, Chinese perceptions of the EU have also experienced notable changes. There has been remarkable frustration among the Chinese foreign policy circles that the EU is becoming increasingly difficult to placate and the previous economic diplomacy seems to be less effective now. The recent China-EU Prague Summit best attests to the major differences over human rights, climate change, China's market economy status, arms embargo and mutual willingness to expand cooperation in the areas of trade, small and medium sized enterprises, science and technology, clean energy, infrastructure and communications. (84)

Yet, a dramatic downward turn in China-EU relations is unlikely. For China, the EU will remain an important political force with whom it must cooperate to push for the growth of multilateralism and maintain a stable international order. At the strategic level, given the fact that the US and Japan, and also other major powers in the Asia Pacific such as India and Australia, are distrustful of China, China certainly needs the EU more than the other way around. In this regard, the EU is irreplaceable for China because the former is the largest economic entity and trade centre in the world, the largest humanitarian provider, has a population double the US', has two UN Security Council members and has two nuclear powers. (85) Therefore, on one hand, maintaining a stable relationship with the EU is crucial for China's international standing and active role in global affairs. In the Chinese strategic policy community, there is hardly a detectable group of analysts who are hardliners against further Chinese engagement of the EU. At the popular level, the intensity of anger and nationalistic sentiment has been mostly event-driven. On the other hand, the EU will also have to realise that China plays an indispensable role in resolving major international issues, be they on regional security, economic growth, financial stability or climate change. China will continue to be of value to the EU if the EU wants to play a more significant role in international politics. Clearly within the EU, some people would still value China's strategic importance in tackling various serious issues confronting global governance: climate change, nuclear non-proliferation, Africa and maintaining an open global trading system. (86)

On the part of the EU, there is little sign that economic interest is becoming a less important consideration. Smaller European firms may find Eastern Europe a more attractive investment place, but big companies which base their investment on market-seeking motivations are unlikely to alter their engagement in China. European leaders still believe that close strategic relations with China would continue to boost the EU's international standing as an independent political force and would help increase the EU's competitiveness alongside the US and Japan, particularly in Asia. (87) Similarly, economic interests will continue to be a strong incentive for China to maintain at least good relations with European countries given the fact that China will still need the European market as well as the investments and technologies of Europe.

Both the EU and China will hold dear to their respective national interests, and economic nationalism is likely to be more assertive in the years to come. Ultimately, both sides will have to recognise that their economies are now intertwined. Trade deficits will continue to hit news headlines, but European political elites will have to understand that a significant proportion of the added values of products "made in China" eventually accrue to European companies that design and market them. Therefore, the challenge for a future EU policy on China is to balance the political and economic elements involved. (88) For China, it is likely that it can make more concessions to EU demands if the current Chinese strategy of tapping into the potential of the domestic market for economic growth becomes successful. The existing influence of economic interests and strategic concerns will largely define the ground of Sino-European relations. However, the relationship is likely to be negatively impacted by emerging differences. In short, a normal partnership instead of a comprehensive strategic partnership is likely to be the new modus operandi in China-European ties.

(51) Stephen Castle and Carter Dougherty, "EU Turning to China in Bid to Rein in the Euro; Europeans Join US in Taking Tough Line on Value of Yuan", International Herald Tribune, 24 Nov. 2007.

(52) Vince Chong, "EU, China Trade Reps Appear to Mend Fences", Straits Times, 26 Apr. 2008.

(53) Jonathan Eyal, "EU's Ties with China at Crucial Crossroads", Straits Times, 13 June 2007.

(54) Tracy Quek, "Europe's Reservations over Safety of Chinese Goods Go Down Badly in Beijing", Straits Times, 27 Nov. 2007.

(55) Zhang Jian, "Zhong ou guanxi jinru tiaozheng he shiying qi" (Sino-EU Relations Entering a Period of Readjustment and Adaptation), Liao wang (Outlook Weekly), issue 23, 4 June 2007.

(56) For a detailed analysis on the impact of the 2006 policy paper on EU-China relations, see Gunter Schucher, "Dashed Hopes".

(57) Tiger Tong, "China, EU Agree Only on the Agreed", Business Times (Singapore), 4 Dec. 2007.

(58) Stephen Green, "China's Quest for Market Economy Status", Chatham House Briefing Note, May 2004.

(59) John Fox and Francois Godement, "A Power Audit of EU-China Relations", Policy Report, European Council on Foreign Relations, Apr. 2009.

(60) "China, EU to Set Up High-level Dialogue to Address Trade Imbalance", BBC Worldwide Monitoring, 3 Dec. 2007.

(61) "China and EU Agree to Cooperate", International Herald Tribune, 26 Apr. 2008.

(62) Tony Barber and Geoff Dyer, "Wen Tour of Europe Looks at China's Role in Fighting Crisis", Financial Times, 28 Jan. 2009.

(63) "China to Send Purchasing Mission to EU", UPI, 20 May 2009.

(64) Wolfgang Klenner, "China and the EU: Trade, Capital Flows, Strategic Issues", EAI Background Brief, no. 217, 10 Nov. 2004.

(65) John Fox and Francois Godement, "A Power Audit of EU-China Relations", Policy Report, European Council on Foreign Relations, Apr. 2009.

(66) Bates Gill and Melissa Murphy, "China-Europe Relations: Implications and Policy Responses for the United States", A Report of the CSIS Freeman Chair in China Studies, CSIS, May 2008.

(67) David Shambaugh, "The New Strategic Triangle: U.S. and European Reactions to China's Rise", The Washington Quarterly 28, no. 3 (Summer 2005): 7-25.

(68) Christopher Griffin and Raffaello Pantucci, "A Treacherous Triangle? China and the Transatlantic Alliance".

(69) Judy Dempsey, "Speaking of Freedom, Merkel Means Business", International Herald Tribune, 2 Sept. 2007.

(70) Huo Zhengde, "Lun Zhong ou zhanlue guanxi" (Analyzing Sino-EU Strategic Relations).

(71) Ding Yuanhong, "Oumeng de kunhuo yu zhong ou guanxi" (The EU's Frustration and Sino-EU Relations), Guoji wenti yanjiu (International Studies), issue 4, 2006.

(72) Ibid.

(73) "China and EU--The New Partners?", China Daily, 7 June 2007.

(74) John Fox and Francois Godement, "A Power Audit of EU-China Relations", Policy Report, European Council on Foreign Relations, Apr. 2009.

(75) Reuben Wong, "Towards a Common European Policy on China? Economic, Diplomatic and Human Rights Trends Since 1985", Current Politics and Economics of Asia, 17, no. 1 (2008): 155-81.

(76) Zhang Jian, "Zhong ou guanxi jinru tiaozheng he shiying qi" (Sino-EU Relations Entering a Period of Readjustment and Adaptation).

(77) John Thornhill, "Trading Strains", Financial Times, 1 Oct. 2008.

(78) Frank Ching, "Chinese Nationalism Fails to Impress the World", New Straits Times (Malaysia), 15 May 2008.

(79) "Spies Targeting Britain", Sunday Telegraph, 8 Feb. 2009; Belfast Telegraph, "Chinese Government Accused of Cyber Spying", 30 Mar. 2009.

(80) Richard Spencer, "China Rejects EU Climate Target as Lacking 'Scientific Basis'", Daily Telegraph, 5 June 2007.

(81) Charles Grant with Katinka Barysch, "Can Europe and China Shape A New World Order?".

(82) Ibid.

(83) Stanley Crossick and Etienne Reuter, eds, China-EU: a Common Future.

(84) "Wen Jiabao Attends the 11th China-EU Summit", Xinhua News Agency, 21 May 2009.

(85) Lu Niehai, "Csong guojia liyi kan fazhan zhong ou guanxi de zhongyao xing" (The Importance of Developing Sino-EU Relations Seen from a National Interest Perspective), Heping yu fazhan (Peace and Development), no. 4, Nov. 2007.

(86) Charles Grant, "Europe Must Build a Strategic Alliance with China", Financial Times, 9 June 2008.

(87) Wolfgang Klenner, "Economic Relations between the EU and China". A previous version of this paper was presented at the Second Global International Studies Conference, Ljubljana, Slovenia, in July 2008. The author is grateful for the useful comments from the participants at the conference and the two anonymous reviewers of this journal.

(88) Carol M. Glen and Richard C. Murgo, "EU-China Relations: Balancing Political Challenges with Economic Opportunities", Asia Europe Journal 5 (2007): 331-44.

Mingiang Li (ismjli@ntu.edu.sg) is Assistant Professor at the S. Rajaratnam School of International Studies, Nanyang Technological University. He did his PhD at Boston University in political science. His current research interests focus on China's international relations in East Asia.
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